Correlation Between Bank of America and GigCapital5
Can any of the company-specific risk be diversified away by investing in both Bank of America and GigCapital5 at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Bank of America and GigCapital5 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bank of America and GigCapital5, you can compare the effects of market volatilities on Bank of America and GigCapital5 and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Bank of America with a short position of GigCapital5. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bank of America and GigCapital5.
Diversification Opportunities for Bank of America and GigCapital5
-0.81 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Bank and GigCapital5 is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Bank of America and GigCapital5 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GigCapital5 and Bank of America is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Bank of America are associated (or correlated) with GigCapital5. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GigCapital5 has no effect on the direction of Bank of America i.e., Bank of America and GigCapital5 go up and down completely randomly.
Pair Corralation between Bank of America and GigCapital5
Considering the 90-day investment horizon Bank of America is expected to generate 34.03 times less return on investment than GigCapital5. But when comparing it to its historical volatility, Bank of America is 22.13 times less risky than GigCapital5. It trades about 0.06 of its potential returns per unit of risk. GigCapital5 is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 1.73 in GigCapital5 on August 30, 2024 and sell it today you would lose (0.58) from holding GigCapital5 or give up 33.53% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 20.81% |
| Values | Daily Returns |
Bank of America vs. GigCapital5
Performance |
| Timeline |
| Bank of America |
| GigCapital5 |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Bank of America and GigCapital5 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bank of America and GigCapital5
The main advantage of trading using opposite Bank of America and GigCapital5 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bank of America position performs unexpectedly, GigCapital5 can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in GigCapital5 will offset losses from the drop in GigCapital5's long position.| Bank of America vs. Citigroup | Bank of America vs. Wells Fargo | Bank of America vs. Toronto Dominion Bank | Bank of America vs. JPMorgan Chase Co |
| GigCapital5 vs. Valneva SE ADR | GigCapital5 vs. Payoneer Global | GigCapital5 vs. Uber Technologies | GigCapital5 vs. Usio Inc |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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